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European Union had pressured the island nation to require applicants to live in country for one year

Bowing to stiff European Union criticism, Malta has agreed to require one year of residency for foreigners buying Maltese passports, amending a controversial citizenship program aimed at attracting ultra-high net worth individuals.

Last year, Malta introduced a controversial program which allowed for wealthy individuals who invested $1.57 million in the country to apply for citizenship. Because the tiny Mediterranean island nation is a member of the European Union, Maltese passport holders become EU citizens with rights to travel easily between the 26 states in the Union's Schengen Zone.

Malta and the European Commission said in a joint statement Wednesday night that naturalization certificates will only be granted after applicants prove they have lived in Malta for a year.

The firm cites “tax-planning” and “political circumstances” – everything from civil war to travel restrictions imposed on residents from certain countries – as reasons the ultra-rich might choose to apply for a second passport.

Initially, there was to be a 1,800 cap on the number of such passports granted, but the statement said Malta now reserves the right to raise that limit.

Earlier this month, the European Parliament had urged Malta to stop the program. Malta is not the only EU member to sell citizenship — Austria and Cyprus have similar programs that grant immediate citizenship to investors without proof of residence.